Can Virtual AGMs Eventually Replace Physical AGMs

It’s that time of the year again where annual general meetings (AGMs) are held for investors to find out more about a company’s prospects and plans.

Except that this year, things are markedly different.

With the COVID-19 pandemic still raging around the world, countries have banned gatherings to stem the spread of the deadly disease.

As a result, many companies have had to scrap physical AGMs in favour of virtual ones instead.

These virtual sessions are held via videoconferencing and transmit a live feed of the proceedings via video link to registered participants.

Such virtual meetings cut down on the number of logistics and planning required.

They are also less costly to organise.

Could this be a permanent fixture even after the pandemic has passed? Will virtual AGMs eventually replace physical attendance at AGMs?

No standard for virtual AGMs

Many companies have been forced to adjourn their AGMs and have had to scramble to adapt to the new regulations.

As there are no firm guidelines on how virtual AGMs should be conducted, companies turned up with a variety of methods to engage shareholders.

Some, like iFAST Corporation Limited (SGX: AIY), offered the opportunity for shareholders to ask questions “live”.

As the AGM proceeded, participants could open up a panel on their computer screens to type in their questions.

Management would then tackle the questions by providing verbal replies.

iFAST has even taken things one step further by publishing the full list of questions asked and replies given on SGXNet, in line with its push for transparency.

Others, such as VICOM Limited (SGX: V01), requested that questions be sent in before the AGM and that these questions will be read out and tackled by management during the AGM proper.

Absence of “live” interaction

While it is true that virtual AGMs cut down on expenses and reduce the time for preparation, there is the absence of the element of “live” interaction.

Currently, many companies are not equipped with either the technology or the inclination to tackle questions in a way that simulates a live discussion.

Part of the reason could be due to the inability to filter out undesirable or embarrassing questions that may put management on the spot.

The lack of personal interaction may also result in less candour on the part of management.

Questions asked in this way also tend to be more formal, rather than the informal discussions that take place between shareholders and management in a physical setting.

From personal experience, I feel that management may be more willing to share about challenges, troubles or difficulties faced by the business during a post-AGM informal discussion.

Body language

Companies are, after all, run by human beings.

Physical attendance at AGMs allows us to observe management’s body language, tone and posture.

These may provide clues as to whether management is confident, hesitant or unwilling to share details.

While some may argue against the effectiveness of observing body language, there is no doubt that face-to-face interactions enhance communication between two parties.

From my experience, I’ve met my fair share of management whose replies have come across as evasive.

I was also able to tell when CEOs were being candid, versus others who were more reticent.

And all this through simple observation of body language, tones and gestures.

Get Smart: A good addition, but not a 100% substitute

Let’s face it — virtual AGMs are, without a doubt, a useful tool to engage shareholders.

For shareholders who may not be able to attend an AGM physically (due to mobility or other issues), virtual AGMs open up new ways for them to engage management.

However, as mentioned above, there are disadvantages to holding purely virtual AGMs.

A good middle ground would be to continue with physical AGMs, yet have the additional option of attending virtually as well.

This rule should be made compulsory for all listed companies — that future AGMs be live-streamed and also recorded so they can be played back by shareholders who could not attend.

The AGM proceedings can also be viewed by investors who are interested in finding out more about the company but are not shareholders themselves.

After all, all information disclosed during AGMs should, technically, be publicly available information.

We still have a long way to go for virtual AGMs, but this year represents a step in the right direction.

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Disclaimer: Royston Yang owns shares in iFast Corporation Limited and VICOM Limited.

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